Ok ... first the employer cannot stop paying him as an employee and switch him to a contractor at will. If he will still work as an employee where he uses the company truck and goes when and where the employer tells them then he is still an employee and should remain as such. When an employer tells you that you need to set up your own LLC then they are not following the law. Usually contractors own their own trucks, pay all their own operating costs, bargain for the fee they will be paid for each job and are free to work for any trucking company.
Now ... if you agree to work as a contractor and pay the employers part of the FICA taxes and have no workman's comp insurance, no unemployment comp possibilities, no company health insurance and no company benefits like vacation or sick days then you will need to decide what kind of business entity you will set up. I highly recommend you seek local professional assistance to get this done correctly and get educated on the requirement each option needs.
In the big picture you will still only file one federal tax return and both your income will be reported on it ... and if you incorporate or set up a partnership then a separate return will be filed for that company before the personal return. Please seek advice.
